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News bulletin: Vale Inco to shut down Sudbury operations from June 1 to July 27 (comment on this story) 0

Vale Inco is shutting down its nickel mining and processing operations in Greater Sudbury for eight weeks starting June 1 due to weak demand for the metal used to make stainless steel, the company said Thursday.

The Brazilian-owned miner said it will also shut down its precious metal processing plant in Port Colborne, in the Niagara region of southern Ontario, for the same period. The precious metals come from nickel mining operations in Greater Sudbury.

More than 4,000 employees will be off work for the shutdown's duration, while a small number will be required to work for maintenance and other operating purposes, Vale Inco spokesman Cory McPhee said.

"The majority will be required to take vacation entitlements," McPhee said.

Senior employees will have accrued sufficient vacation time to maintain their regular incomes for most, if not all of the shutdown's duration, he said.

Junior employees with less vacation entitlement will have access to a "supplemental unemployment benefit plan" that will add to their employment insurance benefits, he added.

Vale Inco also recognizes the extended shutdown will have a "trickle-down" effect in the community, particularly among companies that supply goods and services to local mining operations, McPhee said.

The company also announced it would slow down the opening of its Onça Puma nickel project in Brazil, previously scheduled to come on stream in January 2010. Given that an environmental permit is still pending, the start-up of Onça Puma will be postponed by at least one year.

Like all miners, Vale Inco has been squeezed by reduced demand for base metals such as copper, nickel, zinc and iron because the global recession has cut the need for steel, pipe, construction products and other materials used in building houses, commercial buildings, factories and other capital projects.

The shutdown of the former Inco operations in Sudbury will follow a planned maintenance period in May.

Last month, the company cut about more than 400 white-collar jobs in Canada as part of a restructuring of its operations amid a slumping nickel price.

Those cuts included 261 layoffs in Sudbury; 24 at its mines in Thompson, Man.; 39 at its nickel-copper-cobalt deposit in Labrador; 74 at its technology centre in Mississauga, Ont., six at its refinery in Port Colborne, Ont., and 19 at its headquarters in Toronto.

The shutdown announcement late Thursday comes as Vale Inco and the United Steelworkers begin talks on a new three-year contract.

They are the first contract talks since Brazil-based Companhia Vale do Rio Doce bought the former Inco Ltd. for $19 billion in October 2006.

The current three-year contract expires May 31.

Last week, Xstrata shut down its Kidd Creek copper smelter in Timmins for eight weeks because of falling demand for sulphuric acid, a byproduct of the smelting process.

Xstrata Nickel has 175 employees at the smelter but said it would try to minimize the number of layoffs by assigning workers to other jobs within the facility or by encouraging them to take vacation time.

Xstrata laid off 686 salaried and unionized employees at its nickel mines in Sudbury in February.